Nitti v. Penn Credit Corporation

Filing 18

MEMORANDUM OPINION. See Opinion for details. Signed by District Judge Henry E. Hudson on 10/2/2017. (sbea, )

IN THE UNITED STATES DISTRICT COURT
FOR THE EASTERN DISTRICT OF VIRGINIA
Richmond Division

ROBERT A. NITTI,

Plaintiff,
Civil Action No. 3:17CV422-HEH

V.

PENN CREDIT CORPORATION,
Defendant.

MEMORANDUM OPINION

(Granting Defendant's Motion to Dismiss)
THIS MATTER is before the Court on Defendant Penn Credit Corporation's

("Defendant") Motion to Dismiss Plaintiffs Complaint pursuant to Federal Rules of Civil
Procedure 12(b)(1) and 12(b)(6) (ECF No. 9), filed onAugust 31, 2017, and Plaintiffs
Motion to Amend Complaint (ECF No. 13), filed on September 13,2017. The issues have
been briefed and are ripe for review. The Court will dispense with oral argument because

the facts and legal contentions are adequately presented in the materials presently before
the Courtand argument would not aid in the decisional process. E.D. Va. Local Civ. R.

7(J). For the reasons discussed herein, Defendant's Motion will be granted; because the
Court finds that it lacks subject matterjurisdiction over the action, it does not reach
Plaintiffs Motion.
1. BACKGROUND

Defendant is a debt collector that regularly operates in this district. (Am. Class

Action Compl. ("Am. Compl.") H4, ECF No. 4.) Defendant has contracted with the

Virginia Department of Taxation to collect Virginia individual income taxes. {Id. U6.)

Defendantsent Robert A. Nitti ("Plaintiff) certain"Broken Promise" letters on or around

February 1, 2016. (Id. H10.) The letters stated that they were "an attempt to collect a
debt" and notified Plaintiff that, "It is important that you either make payment or contact

our office today." {Id. 111.)^ The letters further listed twenty-one debts that Plaintiff
allegedly owed to the Virginia Department of Taxation. (Jd.) At least one of the debts
listed was for individual income tax that had first been assessed more than seven years

prior, despite the fact that the limitations period for the collection of Virginia state taxes is
seven years. {Id.

11-12 (citing Va. Code § 58.2-1802,1).)

According to the Complaint, Defendant is aware of the statute of limitations for
individual income tax collection. {Id. ^ 14.) Nevertheless, Defendant does not investigate

or have any procedure to verify whether the tax debts it attempts to collect are timebarred. {Id. H15.) Defendant merely sends letters to all individuals identified by the

Virginia Department of Taxation as persons owing tax debts. {Id.) Plaintiff asserts that
this behavior violates the Fair Debt Collection Practices Act, 15 U.S.C. §§ 1692e and

1692f {Id. fl 26, 32.) Plaintiff, on behalfof himself and all other similarly situated,

seeks a permanent injunction against Defendant, as well as statutory damages for himself
and each class member and an award of reasonable attorney fees and costs. {Id.

27,

33.)

In the Motion to Dismiss, Defendant asks the Court to dismiss the action for lack of

subject matterjurisdiction, or in the alternative for failure to state a claim. Plaintiff,

' TheAmended Complaint cites to the"letters attached as Exhibit A" (Am. Compl. 110), butno exhibit is
attached. The Court therefore relies on the quotations contained in the Amended Complaint.
2

having already amended his Complaint once as a matter of right, now seeks leave to
amend in order to better articulate standing and to restate his claim.
II. LEGAL STANDARDS^
A. 12(b)(1)

A motionto dismiss for lack of subject matterjurisdiction is governed by Federal
Rule of Civil Procedure 12(b)(1). As recognized by the Fourth Circuit, "[t]here are two

critically different ways in which to present a motion to dismiss for lack of subject matter

jurisdiction" under Rule 12(b)(1). Adams v. Bain, 697 F.2d 1213, 1219 (4th Cir. 1982).
First, a defendant may challenge jurisdiction facially and"contend 'that a complaint

simply fails to allege facts upon which subject matter jurisdiction can be based.'" Kerns
V. UnitedStates, 585 F.3d 187, 192 (4th Cir. 2009) (quoting

697 F.2d at 1219). "In

thatevent, all the facts alleged in the complaint are assumed to be true and the plaintiff, in
effect, is afforded the same procedural protection as he would receive under a Rule
12(b)(6) consideration." Bain, 697 F.2d at 1219.

Alternatively, a defendant may challenge jurisdiction factually and "contend ...

'that thejurisdictional allegations of the complaint [are] nottrue.'" Kerns, 585 F.Sd at
192 (alteration in original) (quoting Bain, 697 F.2d at 1219). When—and only when—a
defendant takes this latterposition, "'[a] trial court may ... go beyond the allegations of

^ Federal courts are courts of limited jurisdiction, possessing "onlythat power authorized by Constitution
and statute." Kokkonen v. Guardian LifeIns. Co. ofAm., 511 U.S. 375, 111 (1994). Accordingly,

jurisdiction is a threshold matter, andthe Court's analysis must begin—and in thiscase, end—with a
jurisdictional analysis. Id. Because the Court finds that Plaintiffs have not alleged facts sufficient to
confer standing, it need not address Defendant's argument for dismissal grounded on Federal Rule of Civil
Procedure 12(b)(6), nor Plaintiffs argument that he should be granted leave to amendyet again.
See Saxon Fibers, LLC v. Wood, 118 F. App'x. 750, 752 (4th Cir. 2005) ("[A] court without subject matter
jurisdiction lacks authority to grant a party's amendment motion.").

the complaint and in an evidentiary hearing determine if there are facts to support the
jurisdictional allegations,' without converting themotion to a summary judgment
proceeding." Id, (quoting

697 F.2d at 1219).

In this case, Defendant brings a facial challenge to standing. Accordingly, the

Court's analysis is confined to the facts as pled in theAmended Complaint.
B. Standing

The Supreme Court has established that the "irreducible constitutional minimum"

of standing includes three elements: (1) an injury-in-fact; (2) a causal connection between

the injury and the alleged misconduct; and (3) a likelihood that the injury will be redressed
by a favorable decision. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992)
(citations omitted). "Where, as here, a case is atthe pleading stage, the plaintiff must

'clearly ... allege facts demonstrating' each element." Spokeo, Inc. v. Robins, 136 S. Ct.
1540, 1547 (2016) (as revised May 24, 2016) (quoting Warth v. Seldin, 422 U.S. 518
(1975)).

In orderto show injury-in-fact at the pleading stage, a plaintiffmust allege "'an

invasion of a legally protected interest' that is 'concrete and particularized' and 'actual
and imminent, not conjectural or hypothetical.'" Id. at 1548 (quoting

504 U.S. at

560). To satisfy the concreteness requirement, a plaintiff must allege an injury—either

tangible or intangible—^that actually exists. Id. at 1548-49. The Supreme Court has made
clear that "Article III standing requires a concrete injury even in the context of a statutory
violation." Id. at 1549. However, in certain limited circumstances the statutory violation

4

itself may be sufficient to satisfy the concrete injury requirement, because the violation
creates "the risk of real harm." Id. (emphasis added).

In determining whether an intangible harm—inthe present case, the harm created
by a bare statutory violation—constitutes a concrete injury, "both history and the

judgmentof Congress play important roles." Id. Specifically, a court should "consider
whether an alleged intangible harm has a close relationship to a harm that has traditionally
been regarded as providing a basis for a lawsuit in English or American courts." Id. A
court should also consider whether Congress sought to prevent a particular type of harm

by "elevat[ing] to the status of legally cognizable injuries concrete, defacto injuries that
were previously inadequate at law," andwhether the statutory violation alleged implicates

that specific harm. Id. (quoting Lujan); see also Dreher v. Experian Info. Sol's, Inc., 856
F.3d 337, 345 (4th Cir. 2017) (findingpersuasivethe D.C. Circuit's reasoning that "a

plaintiffsuffers a concrete ... injury where he is denied access to information required to
be disclosed by statute, and he 'suffers, by being denied access to that information, the

type of harm Congress sought to prevent by requiring disclosure.'" (quoting Friends of
Animals v. Jewell, 828 F.3d 989, 992 (D.C. Cir. 2016))). In such a case, "a plaintiff...

need not allege any additional harm beyond the one Congress has identified." Spokeo,
136S.Ct.atl549.
III. ANALYSIS

The entirety of Plaintiffs Amended Complaint distills to an allegation that

Defendant violated the FDCPA by representing that Plaintiffs debt was collectible, when
at least part of the debt had been incurred outside the limitation period for the collection of

individual income taxes in Virginia. {See Am. Compl.

10-12, 23-33.) Based on the

parties' briefs, it appears undisputed that, on its face, the Amended Complaint is devoid of
any reference to Plaintiff suffering any actual harm as a result of these alleged violations.
Plaintiff attempts to cure this deficiency through his proposed Second Amended

Complaint, in which he alleges that he suffered various emotional injuries. (ECF No. 13-

1.) However, as Defendant rightly points out, theprocedural posture of this case dictates
that Plaintiffcannot amend the Complaint again without the Court's approval, and if the

Court lacks subject matter jurisdiction, it has no authority to grant such approval. See Fed.
R. Civ. P. 15(a); Saxon Fibers, 118 F. App'x. at 752. The Court is accordingly bound by
the facts as pled in the Amended Complaint, and it cannot consider the allegations

contained in the proposed Second Amended Complaint in determining whether Plaintiff
has standing. As a result, the Court concludes that Plaintiffhas failed to allege facts that
show he suffered harm beyond the bare statutory violation.

Absent any such facts, the Court must determine whether the alleged statutory
violation alone caused Plaintiff to suffer a "risk of real harm" that is likely to occur in the

future. Spokeo, 136 S. Ct. at 1549. Plaintiffappears to recognize that a risk of future
harm can, in some cases, satisfy the requirements of standing in and of itself. (Mem. 0pp.
Mot. Dismiss 5, n.l, ECF No. 15 (pointing out that the Supreme Court remanded Spokeo
to the Ninth Circuit to determine "whether the particular procedural violations alleged in

this case entail a degree of risk sufficient to meet the concreteness requirement").)
Nevertheless, Plaintiff fails to advance any such risk-based arguments with regard to his

own purported injury and insteadrests his case for standingsolely on the injuries newly

alleged in the proposed SecondAmended Complaint. {Id. at 5, 9-10.) For the reasons
stated previously, the Court cannot and does not considerthose allegations.
Because Plaintiff does not demonstrate that the alleged statutory violation put him

at any risk of real future harm or that the bare statutory violation constituted a concrete

injury based on "both history and thejudgment of Congress," the Court finds that Plaintiff
has failed to plead facts showing that he has standing to sue. Spokeo, 136 S. Ct. at 1549;
see also id. at 1553 (Thomas, J., concurring) (emphasizing that it is the plaintiffs burden

to demonstrate harm).^ As a result, the Court lacks subject matter jurisdiction, and the
action must be dismissed.
IV. CONCLUSION

Based on the foregoing, Defendant's Motion to Dismiss will be granted, and the

Amended Complaint will be dismissed without prejudice. An appropriate Order will
accompany this Memorandum Opinion.

The clerk is directed to send a copy of this Memorandum Opinion and the
accompanying Order to all counsel of record.

W

H

Henry E. Hudson
United States District Judge

T>?Ae-.Ae.-t. 7 son
Richmond, VA

^This finding is further supported byPlaintiffsconcession that"[Plaintiff] may notsue [Defendant]
directly under the FDCPA, and ... it is clear that [Plaintiffs] right of action arises from the contract and
notfrom the FDCPA.'" (PI. Mem. Supp. Mot. Amend Compl. 4, ECF No. 14 (emphasis added).) The
Court finds it difficult to believe that Congress intended for a violation of the FDCPA to convey automatic
standing upon would-be plaintiffs who cannot even base a lawsuit directly upon the statute. Confronted
with these facts, the Court has simply no basis for finding that Plaintiff "suffer[ed]... the type of harm
Congress sought to prevent" with the statutory provisions at issue, such that pleading a bare statutory
violation satisfies Plaintiffs burden to demonstrate injury-in-fact. Dreher, 856 F.3d at 345.
7